AI Liability Gaps Exposed as Courts Begin Holding Companies Accountable

When AI tools provide wrong information that causes harm, determining legal responsibility remains complex and varies by jurisdiction, with most companies using broad disclaimers to deflect blame. A 2024 British Columbia tribunal ruling in Moffatt v. Air Canada established that businesses are responsible for whatever their AI chatbots tell customers, ordering the airline to compensate a traveller misled by its bot about bereavement fares. In a separate US case, Garcia v. Character Technologies, a federal judge in early 2025 allowed wrongful-death and product-liability claims to proceed by treating an AI chatbot as a 'product' under product-liability law, though the matter later settled. These rulings are beginning to close the gap between how AI tools are marketed — as capable and authoritative — and how their terms of service describe them — as experimental and use-at-your-own-risk. No single comprehensive law yet governs AI-related harm, leaving courts to apply existing legal frameworks such as negligence, consumer protection, and product liability to an entirely new category of technology.